BBLearn Assignment #3

Which of the following is consistent with classical growth theory?

Real GDP per person will never permanently increase.

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT A) decreased private saving. B) a higher real interest rate. C) a smaller capital stock in the future. D) a decreased quantity of investment.

a

The growth rate of real GDP per person in the United States has

averaged approximately 2 percent per year over the past century.

Ongoing economic growth in real GDP per person requires all of the following EXCEPT ________. A) saving and investment in new capital C) population growth B) the discovery of new technologies D) investment in human capital

c

Economic growth is measured by

changes in real GDP.

The view that population growth occurs when real GDP per person exceeds the amount necessary to sustain life is part of the ________.

classical growth theory

The decreasing slope of a production function reflects

diminishing returns.

The funds used to buy and operate physical capital are

financial capital.

We are interested in long-term growth primarily because it brings

higher standards of living.

Workers who pursue an education directly increase their

human capital.

An increase in saving that leads to more capital accumulation ________ labor productivity.

increases

Saving by households

increases when the real interest rate rises.

If the population increases, then potential GDP ________ and employment ________.

increases; increases

The gap between real GDP per person in Africa and real GDP per person in the United States has been

increasing.

The nominal interest rate minus the real interest rate approximately equals the

inflation rate.

If a bankʹs net worth is negative, then the bank definitely is

insolvent.

According to the new growth theory

knowledge is not subject to diminishing returns.

Moving along the aggregate production function shows the relationship between ________, holding all else constant.

labor input and real GDP

According to the law of diminishing returns, an additional unit of

labor produces less output than the previous unit.

The real wage rate will fall if the

labor supply curve shifts rightward and the labor demand curve does not shift.

A higher savings rate that leads to an increase in the capital stock

leads to increases in labor productivity.

Human capital is

peopleʹs knowledge and skills.

Factors that influence labor productivity include ________.

physical capital, human capital, and technology

All of the following contribute to labor productivity growth EXCEPT:

population growth.

Labor growth depends mainly on ________ and labor productivity growth depends mainly on ________.

population growth; technological advances

Labor growth depends mainly on ________ and labor productivity growth depends on ________.

population growth; technological advances

U.S. investment is financed from

private saving, government budget surpluses, and borrowing from the rest of the world.

In the labor market, an increase in labor productivity ________ the real wage rate and ________ the level of employment.

raises; increases

Labor productivity is

real GDP per hour of labor or real GDP per worker.

A firmʹs decision to invest in a project is based on the

real interest rate and the expected profit.

An increase in the working-age population results in a

rightward shift of the supply of labor curve and an increase in potential GDP.

If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________.

stays the same; increases

If net taxes exceed government expenditures, the government sector has a budget ________ and government saving is ________.

surplus; positive

Neoclassical growth theory attributes economic growth to

technological change.

The Industrial Revolution in England in large was the result of

technological innovations encouraged by the market system.

In 2010, of the following ________ had the highest real GDP per person.

the United States

The labor demand curve slopes downward because

the firm maximizes profits by hiring more labor when the real wage rate falls.

If a rich country grows at a faster rate than a poor one, then

the gap in their standard of living will widen over time.

Other things remaining the same, the greater the expected profit,

the greater the amount of investment.

The term ʺcapital,ʺ as used in macroeconomics, refers to

the plant, equipment, buildings, and inventories of raw materials and semi-finished goods.

Greater labor force participation for households at higher real wage rate is one reason that

the supply of labor curve is upward sloping.

The supply of labor curve is

upward sloping.

Using the Rule of 70, if the country of Flowerdomʹs current growth rate of real GDP per person was 7 percent a year, how long would it take the countryʹs real GDP per person to double?

10 years

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

2 percent per year.

If the nominal interest rate is 8 percent and the current inflation rate is 3 percent, approximately what is the real interest rate?

5 percent